On August 2, 2005, the Pharmaceutical Research and Manufacturers of America (PhRMA) announced its adoption of "PhRMA Guiding Principles - Direct to Consumer Advertisements About Prescription Medicines" (hereinafter "the Principles"). The Principles are a set of voluntary restrictions on direct-to-consumer ("DTC") prescription drug advertising that could substantially change how prescription drugs are marketed. Although the Principles do not have the force and effect of law, several major pharmaceutical manufacturers have voiced support and have already stated that they intend to follow (or in some instances exceed) them.

In announcing the Principles on July 21, PhRMA referenced the growing concerns of consumers, doctors, and other health care professionals about prescription drug advertising. Indeed, the Principles come amidst an explosion of drug-related personal injury litigation, Congressional calls for more stringent controls over DTC advertising, and increasing evidence that the pharmaceutical industry is suffering from a public relations crisis. For instance, on August 19, 2005, a jury in Angleton, Texas awarded the widow of a Vioxx user $253 million in the first wrongful death case based on alleged Vioxx use. During the trial, plaintiff's counsel highlighted what he described as "glitzy television ads" and other marketing practices used to stimulate sales. The verdict thus may be seen by many as confirmation of issues surrounding the marketing of prescription drugs, and is likely to add to sentiment for increased regulation over DTC advertising.Thus, whether the Principles are too little, or too late in the pharmaceutical industry's efforts to avoid further restrictions on drug advertising remains to be seen.

The Food and Drug Administration's ("the FDA") promulgation of definitive regulations for DTC advertising reflected the complexity of the issues. Historically, prescription marketing focused on promotions to physicians, hospitals and other health care organizations. The historical market target group drove the FDA's regulatory approach, since doctors were viewed as the principal decision maker regarding the risks and benefits of using a particular prescription drug.

In 1981, however, the first print ad directed at consumers ran in the United States. Even though doctors still acted as gatekeepers - in that they would ultimately decide whether to prescribe an advertised drug for a particular patient - DTC advertising raised concerns about existing regulation. In 1982, the FDA formally requested that the pharmaceutical industry hold off on DTC ads while it reviewed the issue. It did so, and in 1985, the FDA determined that the existing regulatory framework was appropriate for DTC ads, which had to meet the same legal requirements as ads directed at doctors. Thereafter, the FDA issued further direction, most significantly its "Guidance for Industry - Consumer-Directed Broadcast Advertisements," issued in draft in 1997 and finalized in 1999 (hereinafter called the "Guidance.")

The law governing DTC ads is complex; a full analysis here is not practicable. Generally, current FDA regulations are aimed at product-claim or indication advertisements, which promote a specific brand of drug for a particular indication. Under the Federal Food, Drug and Cosmetic Act (21 U.S.C. §352(n)), advertisements must include a "true statement" of, among other things, "information in brief summary relating to side effects, contraindications, and effectiveness." This statement, often called the "brief summary," is more fully described in FDA's regulations which provide detailed guidance on what disclosures are required. Further, the regulations also require that ads present a "fair balance" between risks and benefits, and go on to describe factors which may make advertisements false, misleading or lacking in fair balance.

Although the regulations govern both print ads and broadcast ads, they make special provision for broadcast ads with respect to the "brief summary" requirement. In print ads, it is practical for pharmaceutical companies to include information necessary to satisfy the "brief summary" requirement in the text of the advertisement. This is far more difficult in radio or television spots. Recognizing this, the FDA regulations require that broadcast ads "include information relating to the major side effects and contraindications of the advertised drugs," which is sometimes called the major statement, as well as the brief summary, "unless adequate provision is made for dissemination of the approved or permitted package labeling in connection with the broadcast presentation." In other words, the FDA regulations allow for broadcast ads to provide less detailed information than print ads, so long as they adequately provide that the information gets to recipients of the ads in other ways.

The FDA fleshed out the adequate provision requirement in the Guidance. To ensure that "most of a potentially diverse audience É [receives] reasonably convenient access to the advertised product's approved labeling," companies can satisfy the adequate provision requirement by providing full package labeling through four mechanisms, all of which the Guidance indicated ordinarily should be used:

providing a toll-free number;

referencing a dissemination mechanism, such as concurrent print advertisements which reach the exposed audience with the toll-free number and an address or, in less frequent cases, ensuring concurrent, wide public availability of brochures containing product labeling;

providing an internet web page;

disclosing that pharmacists, physicians or other health care providers may provide additional information to consumers.

More recently, the FDA has issued another draft guidance, this one entitled "Brief Summary: Disclosing Risk Information in Consumer-Directed Print Advertisements." The draft seeks to increase industry options in fulfilling the brief summary requirement other than reprinting the entire section of approved labeling on side effects and warnings because consumers may be discouraged from using that information. This guidance has not yet been finalized.

B. DTC Advertising And Concerns It Fostered

DTC advertising has exploded in recent years. In 1991, the pharmaceutical industry spent approximately $50 million on DTC ads. Ten years later, advertising expenditures were approaching $2.5 billion - a fifty-fold increase. Moreover, approximately 70% of the industry's 2001 advertising dollars were spent for television ads touting a small number of now well known drugs.

As the industry's DTC spending rose, so has the debate over its effects and social utility. The pharmaceutical industry has consistently maintained that DTC ads educate consumers about new treatments and prompt them to seek appropriate medical advice earlier and more often. Critics on the other hand, argue that many ads are misleading, increase the overall cost of prescription drugs, and often pressure doctors into prescribing advertised drugs even when there are less expensive alternatives.

A 2002 survey conducted by the FDA found doctors split on the overall effects of prescription drug advertising. Many doctors participating in the survey believed that ads prompted their patients to ask appropriate questions about available treatments and helped promote early recognition of potentially adverse conditions. At the same time, comparable numbers of doctors believed that the ads led many patients to overestimate the efficacy of individual drugs and created confusion about their effectiveness.

Controversy began to build in 2004 about Vioxx and Celebrex, two well-known and heavily advertised prescription pain medications. In 2000, Vioxx was the most-heavily advertised prescription drug in the United States. Celebrex was seventh. By 2003, the two drugs accounted for more than $4 billion in sales in the United States alone.

In 2004, reports linked the use of both Vioxx and (to a lesser extent) Celebrex to increases in the risk of certain cardiovascular problems. Vioxx was withdrawn from the market, and more than 4,000 lawsuits were brought against its manufacturer. Although Celebrex has not been withdrawn, it and other drugs in its class are now required to include in all labeling boxed warnings (the highest FDA warning level provided under current regulations) highlighting this risk as well as "potentially life-threatening, gastrointestinal bleeding." Celebrex has reportedly been targeted in at least some personal injury suits, as well.

Perhaps not surprisingly, in April, Senators Grassley and Dodd introduced the Food and Drug Administration Safety Act of 2005, which would establish the Center for Post-Market Drug Evaluation and Research within the FDA. This new office would conduct post-market risk assessments on approved drugs and disseminate information about the risks and benefits of such drugs. The bill would also require the submission of DTC and other ads to the FDA prior to dissemination and require further disclosures in ads under certain conditions. In July, Senate Majority Leader Bill Frist suggested a voluntary two-year moratorium on new drug advertising as part of a broad-based attack on the pharmaceutical industry delivered on the Senate Floor. Frist also called on the Government Accountability Office to study the FDA's oversight of DTC advertising, industry expenditures, and the impact of DTC advertising on drug use, costs and patient health.

C. PhRMA's Principles

Against this backdrop, the Principles were approved by PhRMA's Board of Directors on July 29 and go into effect in January, 2006. The Principles recognize that FDA regulations already require that DTC ads be accurate and not misleading, should make claims only when supported by substantial evidence, should reflect a balance between risks and benefits, and should be consistent with FDA-approved labeling. The Principles, and a question-and-answer section included with them, go further and suggest that signatory companies implement the following steps, among others:

Educate health care professionals for an "appropriate amount of time" about new prescription drugs or new therapeutic indications for prescription drugs before commencing the first DTC ads. These educational efforts are intended to provide health care professionals with information about these new drugs or new uses to foster responsible communication with patients likely to have questions generated by DTC advertisements. Companies are also to continue these educational efforts upon receipt of additional, valid and reliable information regarding these drugs;

Submit all new DTC television ads to the FDA a reasonable time before they are broadcast, and inform FDA of the earliest date the ads are scheduled to air (note, however, that the Principles do not require, and the law does not permit, FDA to pre-approve the content of such ads);

Ensure that DTC television ads for a named product state clearly the medical condition for which the drug has been approved for use and the major risks associated with it;

Ensure that DTC television and print ads state in clear, understandable language the risks associated with use of a drug, and, working with FDA, alter or pull DTC ads when new and reliable information indicates a serious, previously unknown safety risk;

Target DTC print and television ads to avoid age-inappropriate audiences ( e.g., television ads for erectile dysfunction drugs should be aired only when the audience is approximately 80% adult);

Establish internal processes to ensure compliance with the Principles.

Under the Principles, PhRMA will also establish an Office of Accountability to receive comments from the public and health care professionals regarding DTC ads by any signatory company, which includes any company which publicly states it will follow the Principles. The Office of Accountability will provide compliance guidance and will issue periodic reports regarding DTC advertising. In January, 2007, the Office of Accountability will appoint an independent panel to review the prior year's reports, examine industry trends relating to the Principles, and make recommendations for future action.

D. What's Next?

Businesses in the life sciences field should pay close attention to the Principles and to the DTC issue in general. Even though the Principles will be followed by many PhRMA members, important interpretative and implementation issues remain. For instance, there is no set period over which a company must educate health care professionals before broadcasting DTC ads, a recurring Congressional concern. The Principles suggest that the "appropriate time" is to be determined by each company in light of factors identified in the Principles, including the importance of alerting patients to the availability of the drug, the complexity of the drug's risk-benefit profile, and the health care field's knowledge of the condition being treated.

Nor is it possible to predict Congressional or governmental response to the Principles, and in particular, what effect they may have in forestalling further action by Congress or the FDA. For its part, the FDA is expected to begin a major regulatory review governing DTC advertising. Indeed, Lester Crawford, the new head of the FDA, recently announced that he will be holding public hearings this Fall in Cambridge, Massachusetts, Florida, and Arizona in which the FDA is expected to elicit public comment on DTC ads. Crawford believes DTC ads can be beneficial, but is reportedly weighing whether clearer guidelines are in order.

There is also reason to question whether the Principles go far enough. Already, two prominent PhRMA members have pledged to do more. Although the Principles do not call for a moratorium on DTC ads for new drugs, Bristol-Myers Squibb has announced it will hold off on DTC ads for at least one year following a new product launch - and said so before the Principles were released. After publication of the Principles, Pfizer announced it would not begin DTC ads for new drugs for at least six months.

Michael D. Ricciuti and John A. Wortmann, Jr. are former federal prosecutors who are Partners in the Boston office of Kirkpatrick & Lockhart Nicholson Graham ("K&LNG") Both are also members of K&LNG's Bio Pharma Task Force, a group of corporate, regulatory, and white collar defense and trial lawyers formed to address regulatory and litigation issues in the Pharmaceutical Industry.